Further to the announcement made on 30 April 2015 in relation to the qualified opinion by the External Auditors, Messrs Helmi Talib & Co., the Board of Directors of CNOUHUA wishes to provide the following information:-

1. As provided in the Sale and Purchase Agreement (“SPA”), the deposit of RMB118,800,000.00 paid to Huangwu Subdistrict Office, Zhifu District, Yantai City, PRC (“Huangwu Subdistrict Office”) for the acquisition of all the land and buildings and ancillary facilities including 320KVA power distribution equipment, water supply system, roads surrounding the factory and enclosing wall (collectively known as “Assets”) located at No. 3, Wolong North Road, Yantai City shall be recoverable in the event the transaction for the acquisition is unable to be completed.

The Company has been dealing directly with Officers of Huangwu Subdistrict Office and monitors closely to expedite the transfer of property ownership.  The Management envisaged there shall be no issues for the issuance of the land title and Huangwu Subdistrict Office had also indicated their intention to complete the transfer of property ownership as soon as possible and to receive the final payment.

2. The expected completion date of the acquisition as stated in the SPA entered in between Huangwu Subdistrict Office and the Company is by April 2014.  However, shortly after execution of the SPA, the Land Commission of Central Government of China embarked on an exercise to conduct audit on all land titles in the entire China and thus de-prioritised the processing of all applications relating to land matters.  At this juncture, the Board is unable to ascertain the expected completion date as the duration to be taken for the transfer of property ownership is reckoned to be hard to determine.

However, the Company is proactively engaging with the Huangwu Subdistrict Office and as stated above, Huangwu Subdistrict Office had indicated their intention to complete the transfer of property ownership as soon as possible and to receive the final payment.